Kilembe Mine Revival: Gov't, Contractor to Sign Final Agreement in a Month

Kilembe Mines, once one of Uganda's most important and respected economic icons, is nearing the restoration of its lost glory as revival plans near completion. "So, Kilembe Mines: the final, final, final signature is expected by November 1; that's when we shall have the signature," said Minister for Energy and Mineral Development, Ruth Nankabirwa, during the 13th Uganda Mineral Wealth Conference in Kampala.

This announcement came after Richard Kaijuka, the Chairman of the Board of Trustees of the Uganda Chamber of Mines and Petroleum, expressed concerns about the long delay in the redevelopment of the copper mines in Kasese District, despite numerous promises.

Leaders in the mineral sector believe Uganda is not capitalizing on its potential to become a hub for critical minerals essential for the global energy transition. "It is true that for copper and cobalt, we in the Chamber are not happy with the delays. I'm sure the minister understands why we are becoming impatient," said Kaijuka. He highlighted the global importance of critical minerals, including nickel, lithium, and rare earth elements, which Uganda is rich in, apart from copper and cobalt.

"The demand for these essential materials is surging, particularly for renewable energy technologies and electric vehicles," Kaijuka noted, adding that the world currently relies on a few countries, such as China, for these minerals. "Uganda can position itself as a key supplier in the growing global market for critical minerals," he said.

Minister Nankabirwa explained that the delay was mainly due to efforts to avoid mistakes, with a committee in place to ensure that government requirements align with the agreement and that the investor is prepared to implement them. Kilembe Mines, unlike many government assets shared between ministries, is owned by the Ministry of Finance, Planning, and Economic Development under the Public Enterprise Reform and Divestiture Statute.

This has meant that the Ministry of Energy and Mineral Development cannot proceed without Finance’s input. Official communication on the development of Kilembe Mines, including the production sharing agreements, is expected this Friday. The mines were established in 1950 by Kilembe Mines Limited, a joint venture between two Canadian companies, Frosbisher Limited and Ventures Limited. They operated until 1962, when Falconbridge of Africa acquired the assets, later selling them to the Ugandan government in 1975.

By 1970, Kilembe Mines had peaked at producing about 18,000 tonnes of copper cathode annually and had a smelting plant in Jinja. At that time, copper, along with coffee and cotton, was one of Uganda's top three foreign exchange earners—known as the Three Cs.

However, a combination of aging equipment, falling global copper prices, and claims of resource depletion led to the mine's collapse. The turbulent political climate of the time also contributed to the situation. In 2013, a Chinese company, Tibet-Hima Mining Company Limited, took over the operations, but the government terminated the contract prematurely, accusing the company of slow implementation and exporting unprocessed ore in violation of the agreement.

By 2020, the government relaunched efforts to find a new investor, and in December 2023, it received bids from Gingko Energy, Liaoning Hongda (trading as Wagagai Mining), Sinomine Power China, and Sarrai Group. Reports suggest that Kilembe Mines still hold about 4 million tonnes of ore, containing 1.98% copper and 0.17% cobalt.

In other sector developments, Minister Nankabirwa announced the creation of a National Mining Company, whose Board of Directors was approved by Cabinet earlier this week. The company will manage the state's commercial interests in the mining industry and lead efforts in promoting sustainability and national content.

She also highlighted plans to operationalize the Mining and Minerals Act of 2022, noting that the ministry is establishing regulations and driving inclusion by registering and formalizing over 5,000 artisanal miners. Kilembe Mines is expected to create 4,000 jobs. Currently, global copper prices range between US$10,000 and US$11,000 per metric ton.

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